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Washington 5, Obama 4, Us 4, Dan 3, Peter Morici 3, Romney 3, Roosevelt 2, Mr. Obama 2, Malibu 2, Crowley 2, Metlife 2, America 2, Mr. Romney 1, George W. Bush 1, Clton 1, Christine Romans 1, Mr. Reagan 1, Warren Buffett 1, Mr. Clinton 1, Cbs 1,
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  CNN    Your Bottom Line    News/Business.  
   Financial advice. New.  

    October 6, 2012
    6:30 - 7:00am PDT  

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he really did. he was relaxed before the debate. this is mitt and his wife ann watching their son play a rousing game of jenga. this is real. didn't make this up. they are playing, and look how much fun they are having. have you ever seen a person enjoy watching another person play jenga as much as the romneys are here? he's having a dynamite time. i guess when you don't drink or smoke jenga kicks ass. >> i'll see you back here in 30 minute. "your bottom line" starts right now. there is no debating this. the middle class is stuck. good morning, everyone. i'm christine romans. in a moment cnn's chief political correspondent candy crowley will tell us why washington can't find a middle ground. both president obama and governor romney promised better days ahead, but when will this economy finally start working again for the middle class? the middle class is stuck in the middle. ♪ here i am stuck in the middle
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with you ♪ >> the classic song was from 1973, but today's middle class is stuck as two political parties run away from the center. what the middle class needs is a deal. >> let's make a deal! >> to grow jobs and to fix the fiscal cliff. senators are talking about starting to talk. how close are they? those of you in the middle are stuck between a near-term fiscal cliff calamity and a long-term debt disaster. one means a recession and lost jobs. ignoring the other means slower growth and lost jobs. it will take real statesmanship, washington, to tackle both at the same time. meantime, it's the jobs right in the middle that disappear, and majority of jobs created make just 13 bucks an hour or less. you're stuck in the middle of closing arguments of an election year, but the two words that matter most to the middle class, you're hired. and in a moment we will look at
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whether enough jobs are being added for president obama to keep his job, but i want to start with cnn's chief political correspondent candy crowley. she anchors, of course, "state of the union." candy, tell me why. why is there no middle in washington anymore? >> there is a middle in washington, it's just ever shrinking, and it doesn't get listened to. i could take up your entire hour here as to why this is what it is, but i just want to point out two elections to you. one of them was in 2006 when we had a big wave election. democrats -- sorry, republicans were thrown out of office. which republicans? largely the moderate ones from the northeast. republicans that were in pretty presidentially democratic states. they were thrown out of office, and then we had another wave election in 2010 when people were upset with president obama about health care a number of other things and who got thrown out of office. democrats.
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which democrats? mostly the southern blue dog democrats, the moderate ones, so the very folks, the moderate republicans from the northeast and the conservative democrats from the south that are most inclined to come up with some sort of deal have been pretty much wiped out of office so you have a very, very divided congress where there's no real incentive election-wise to find the middle. >> it doesn't pay to be in the middle. doesn't pay to be in the middle if you're in washington. peter morici is a professor of international business and dan gross is a global business editor at "newsweek" and "the daily beast." here's what the labor marked the looks like right now, these jobs. this is what it looks like. the unemployment rate is now 7.8%. that's the lowest since early 2009. 114,000 jobs created in september. not a lot, not great, but it is still a jobs growth. 40% of the people who are unemployed have been out of work for six months or longer. that's long-term unemployment. still a big concern and look at
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underemployment. 14.7%. these are people who are out of work or would like to work full time but aren't the working -- they are working not to their potential. peter morici, the economy is not giving them everything that they could be working with. despite these numbers, you know, a drop in the jobs rate in particular, you say that it fuels concerns recovery is sputtering and a recession is imminent. why? >> well, for one thing, manufacturing has lost jobs for a couple of months in a row and that was one of the bright stars of the recovery. a number is the unemployment rate is down because we have about 750,000 additional home-based businesses essentially, people who say they are self-employed. in an economy that's growing so slowly it's implausible that they are finding full-time work, but rather they are working a few hours a week and they are being counted in the house hold survey. after all, they are about 4% of the labor force by themselves. it's hard to imagine that 4% of the labor force all of a sudden finds a viable home-based business in an economy that's growing at less than 1.5%.
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>> short timers, got people working part-time, people who are -- are home-based businesses, people doing contract work. dan, i mean, it sounds to me like you don't have an economy that's delivering enough opportunities for people. >> well, certainly not enough, but more than there were in the past. if you look at the payroll jobs number, which is a more reliable indicators i mean, what people want is a payroll job with a steady paycheck and benefits, compared with a year ago, 2 million more people have payroll jobs. the private sector has added about 4.7 millionince the beginning of 2010 which, you know, in ordinary times is not bad, but we need extraordinary numbers to catch up, and one thing worth noting, between 2010 and 2012, you know, i call this a conservative recovery. the private sector added jobs but government, federal, state and local cut jobs. government cut a million jobs between 2010 and the middle of 2012. those tend to be middle class type of jobs with benefits. in the past couple of months we've seen that finally come to
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a halt, and government employment, you know, which people usually don't get too excited about, but that's been a huge detractor from the labor market. the last few months we've actually started to add jobs in government. >> you're right. >> teachers, civil servants, et cetera. i see that as a net positive. >> unless there's a fiscal cliff and you won't be adding government jobs, that's for darn sure. >> let's talk a little bit about the middle, and for the people in the middle, you could argue that the middle class has demand an awful lot over the past 20 or 30 years that sort of led us to this debt problem, led us to this deficit problem. they want homeownership for everybody. we want tax cuts. we want medicare part "d." we want an expansion of safety net programs and then this is what happens. there's no one in the middle to figure out how to pay for all this stuff the middle has been getting. >> and that's really honestly what this election is about. i think one of the things that i found fascinating, although i didn't think they quite got there, is when the two candidates were asked about the role of government, because
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that's what elections are always about, it seems to me. i mean, yes, you know, it's about turning out your base and about this or that, but it is mostly about what do you think the role of government is? should the government, for instance, be helping people buy homes through the deduction that we can take on interest rates on the home loan? that's a legitimate argument. is that really the role of government? and if so, somebody has to pay for it, but i don't think we have yet gotten down to the basics of that. what do you want your government to do because in the end, most everybody wants their government to do whatever it is that they are already getting, and most of us are getting something. >> you know, let me ask you, peter, what is appropriate for a government to do? i mean, these are going to be questions that will be asked over the next few months no matter who is president. what is the appropriate role of government in our lives? >> well, it's got to be less than we are now. since the great recession began, we've added over $1 trillion in spending, and we simply haven't had the growth in the private sector to support it.
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most of that trillion was not because of inflation or more elderly people on the rolls but simply expanding government programs. you can boost employment in the short term a bit that way, but at the end of the day someone has to pay the taxes. and despite what mr. obama says, on many upper income individuals, not talking about mitt romney himself or warren buffett air, lot of moderate-sized businesses where the owner is paying 30% in federal taxes and add in state and local taxes, well over 50, very little incentive create any more jobs in that environment so i think we're at the limit. it's how we divide the government pie up. >> no one move. all three stay put because we'll talk about taxes, deficits and why the middle class is stuck, but america has pulled itself out of this before, right? also, reduced a huge deficit in the process. we have done this before. what president was able to do it, and can it happen again? o. ♪ sophisticated new styling, the fuel-saving intelligence of eassist, 37 mpg highway,
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a smaller deficit and a stronger middle class. two goals president obama and governor romney share. oh, but they disagree.
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they disagree on how to accomplish both. >> the president's put in place as much public debt, almost as much debt held by the public as all prior presidents combined. >> those of us who have done extraordinarily well because of this magnificent country that we live in, that we can afford to do a little bit more to make sure we're not blowing up the deficit. >> let's look at those deficits. let's look at average yearly deficits. president obama, by far the worst record of any president going back to roosevelt in terms of a yearly deficit. it's now like $1.6 trillion. george w. bush was the second worst since roosevelt, so there was obviously a problem president obama was handed when he came to office. look as what he's been handed and look what it's been run up to. if you take the average yearly deficits and put them up as a percentage of gdp or what the country was producing at the time, the size of the deficit compared with the economy, under president obama's watch sill the biggest size of a deficit as
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compared with the economy, still the biggest since roosevelt. look at roosevelt, look back at fdr. the deficit then was nearly as big and that deficit was almost erased. how did roosevelt do that? created social security and levied heavier taxes, programs for housing and agriculture, put new controls over banks, public utilities and created enormous work relief programs for the unemployed. sounds similar to the president's proposals today, but unlike the last four years fdr saw the unemployment drop, millions of jobs created, gdp jumped, the deficit shrank and the middle class saw a huge expansion that lasted for decades, a building of the middle class that's the envy of the world or used to be. peter, peter morici, can this feat of rebuilding the middle class and reducing the deficit, can that happen again? >> absolutely, but we have to remember that roosevelt inherited a very small government, so expanding it wasn't the rock on the back of the private sector. a more comparable situation was
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reag reagan's dilemma, inherited an economy with double digit inflation and interest rates and unemployment that peaked at 10.8%, not 10 as mr. obama's did, but hy he took his stimulus in tax cuts whereas mr. obama did it in targeted spending. in the end, what really got mr. reagan's economy going though was re-realigned our relationship with the rest of the world so we had an export boom, and that eventually created a lot of job and bill clinton wisely took the dividend from that, he was able to then raise taxes that reagan and clton had lowered, and used that dividend to get us into a surplus situation. so it was a combination of realigning america with the world, getting rid of a trade deficit, having an export-led recovery and then taking the dividend and not spending it so much. mr. clinton was very shrewd that way so kudos to two bright presidents, reagan and clinton. >> dan, i want to bring you in because it's a much different global economy than it was in the '40s and '50s. is this working against a
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large-scale rebound like we saw after roosevelt? it's a very different world. >> well, look, first of all, the notion that obama didn't cut taxes and all he did was absurd. the stimulus was one-third tax cuts, big payroll tax cuts. plenty of tax cuts. >> very true. >> and for small business tax cuts, too. >> export boom, exports on a monthly basis have risen 50% from their low in march of 2009. the difference is that we have an economy in which rising demand doesn't necessarily translate into more jobs instantly because we're so good at being productive. we use machinery and software computers. the other big difference between now and the '40s and '40 50s the rest of the world had basically destroyed the rest of its capacity in world war ii so we made everything we wanted, cars, t-shirts, socks, televisions, electronics. we made that all here in the u.s., were consumed it. we exported it because nobody else was doing it. we are not going back to a world in which we will have a monopoly on industrial production. in fact, it's the opposite.
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everybody else now hats hardware to make all the stuff that we did, so it is much more of a challenge to just say, you know, we're going to do these sort of three things that we did back in the '40s and '50s and that will magically bring back all these jobs. >> candy, both candidates have had some trouble with messaging, especially when addressing middle class voters. a month to go. what does the middle class want to hear? >> they want to hear that the job market is getting better. they want to hear that their house is not under threat of being foreclosed upon. they want to hear that -- that some kind of plan that makes them feel that their fifth grader is going to go on to college. they want, you know, just to put it like in cliche terms, they want to know the american dream. they want to know that there will be something there for retirement, that they don't have to work until they are 95 years old just to keep going. now, why hasn't that worked? because i don't think folks have zeroed in on -- on their details, and that goes for
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president obama and mitt romney, and i just don't think people are completely convinced, and they have heard a lot. you know, some of this is just white noise to them right now. i think right now, anybody, middle class or otherwise, that a lot of this -- a lot of the political stuff is coming in as white noise. >> candy, you're right, because i want to know if the mortgage interest deduction is is going to go away and for whom, what income level and i want to know about charitable deductions and i want toy in about investment income and how that will be taksd. that's all on the romney side, and on the obama side, i want to know what are the top three priorities for a second term and how will he fix what his supporters say is intransigence in congress. i haven't -- i don't know the answer to those questions, candy, do you? >> no, i don't, and if you ask on either side, okay, what is mitt romney's plan here? okay, we're going to redo the tax code. what would it look like? we get that you have to have congress help you, but where's your starting position? and i have asked repeatedly on the obama side a lot of folks that work for him, so how -- how
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does term two look different than term one? what's the plan? what are you focused on? nothing. so you're right. >> the political advantage of that if you don't give the details, don't have the opposition research targeting and making ads. >> absolutely. >> dan and peter quickly, each of you. do either of these men have the ability to grow the middle class again in the next four years? i'll start with you, dan. >> well, i don't know about to grow it, but to give them some more comfort, one of the big things that fdr did was provide what i called social insurance, deposit insurance for your banks, income insurance for your old age in social security. obama care, which is basically telling people you can't get kicked off for a pre-existing conditions, can you keep your kids on, in theory there will be subsidies coming for you to buy insurance, to me that's the biggest single leap forward in social insurance that we are likely to get, you know, in this decade or last decade or the one to come. >> peter. you get to close it out >> i think mr. romney really
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does have a plan. i think he looks a lot like reagan and much less like bush than mr. obama claims. his program for trade and energy development, i think he was spot on in the debates in that regard, and that could create somewhere between 5 million to 10 million jobs pretty easily, and so i think that if we got the romney plan on energy and trade and got the obama plan on social insurance, americans would be very, very happy. unfortunately, they are only going to get one of these guys, and so they are only going to get half a loaf. >> nice to see you all. have a great weekend, everybody. >> thanks. >> up next, a career reboot. >> i was happy that i received the offer, happy i got to interview and happy i waited and took out all the risk. >> that's right. the going back to school gamble and how it's paying off for some job seekers. ♪ ♪ [ male announcer ] you've been years in the making. and there are many years ahead.
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i love you, james. don't you love me? i'm a robot. i know. i know you're a robot! but there's more in you than just circuits and wires! uhhh. (cries) a machine can't give you what a person can. that's why ally has knowledgeable people there for you, night and day. ally bank. your money needs an ally. extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math. going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations for the extra activities that, for most kids,
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are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. the unemployment rate fell in september. more people returned to the labor force and hiring was steady. in this week's "smart is the new
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rich," meet one guy who took a big risk to make a career change, and he found a brightening job market. this man wanted to switch careers from operations in i.t. to marketing and big data. in a slow jobs market, that takes training and risk. >> i decided to go back to business school, and i went part-time and realized that i needed even more training, so i left my full-time position and gained internship at cbs, and that was a great gateway, so the internship plus the mba, i was able to fortunately land at metlife. looking at the data more on the marketing end and helping make with strategic decisions. >> the switch took time and money, $80,000 in student loans. >> sit worth the investment to retrain in your career, taking on all those student loans? >> yes, it's worth the investment. >> the degree alone doesn't open doors. he also worked with a job koesm. >> we really worked with him on
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interviewing and networking. his resume speaks to what he did before. in order for people to think of him in a different way, he really had to talk to people. >> not all career switches require an mba and $80,000 in debt. consider community colleges or free online courses. >> a career changer can't seem like a career changer. people will ask about experience if you're not demonstrating enough expertise or a skill set. you have to show the people who are already in that job, in that industry that i can do this too and it's just a question of getting hired. >> remember, an employer typically scans a resume for ten seconds or less. >> too many job seekers will suspend the rest of their search hoping for the perfect resume that gets noticed. it's irrelevant. what really matters is networking and interviewing. you want to get in front of as many people and tell them your story. in his case, he was interested in strategy, he talked to people
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who had those jobs. >> it was a two and a half-year journey to get the job that i wanted, but it was definitely worth it and it's paying off now. this is my dream job. >> he took a big risk, but he calls it an investment in himself and he hopes to keep moving up at metlife. coming up, the first debate is over. more still to come. what i still need to hear. amricans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ side by side so you get the same coverage, often for less.
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i want to show you something that's fun ander in di, it's called a word cloud. it turns text into a visual representation with the words uttering the most appearing the
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largest in the screen. we dade word cloud from this first presidential cloud. the one that jumps out is the word "people." it was a substantive debate. you didn't hear a lot of zing zingers. that's a surprise in this age of politics, when so often we'd rather be entertained than have a real discussion of the issues. deficit was a serious part of the conversation. entitlements were as well. look at the word medicare there. but there was a lot i wanted to still hear that i didn't. jobs. there it is. jobs in our word cloud. it's pretty small. it should be bigger. a lot bigger. and you know what we didn't hear at all? we didn't hear about the fiscal cliff. the massive tax cuts scheduled to take january 1st. the self-inflicted wound that will send this economy spiraling back into recession and is already holding back hiring and investment. we need to know how both candidates will deal with it. we need to know how they